Cryptocurrency adoption over the years has increased on a massive scale. Hundreds of new businesses have started accepting cryptocurrencies en masse due to the overall popularity of the coins.
However, there are thousands of other traditional companies that refuse to accept cryptos under any circumstance. What makes these two types of companies different from each other? Why would one accept these coins, while others would decline them? Is there some kind of disparity between them?
Let’s find out some of the reasons.
Local crypto volumes
Although cryptocurrencies open up so much potential for tapping into the global markets, most companies prefer to target the local populace before they can attempt global coverage. In order for them to test their products or if the whole idea of accepting crypto will be well received, they need to have a sizeable crypto trading community in their relative country.
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As we all know, there aren’t too many countries where people would have so many cryptos that they’d be willing to spend them rather than keep them in the cold wallets expecting the price to grow.
However, if the country does have a lot of crypto holders, let’s say hundreds of thousands. Then the company could easily afford to launch the service as they’d expect at least 10% of these people to use their cryptos for shopping.
Furthermore, accepting Bitcoin has become somewhat of a unique feature for a company. Promoting their “affiliation with the blockchain” could drive in new customers even if they won’t use cryptos as payments.
People don’t want to pay cryptos for services
The argument for companies not accepting via cryptocurrencies is because it’s not really viable in some cases. Most of the crypto community believe that cryptocurrencies need to be exchanged for goods rather than services for it to have real liquidity and better adoption.
This all comes from the human sub-conscious actually. Whenever you’re buying something online it’s a completely different experience if it’s a service and not a physical object you can hold or even consume. However, whenever a specific asset can be used for those physical objects, it drives this perception for value.
This was the case with Georgian Forex brokers who decided it was a good idea to offer the local population payments in cryptocurrencies for their services. However, it was quickly discovered that almost none of the crypto holders in the country, which is roughly 40%, so about 6-700,000 people refused to participate in the offer.
This all stems from the population’s understanding of using cryptos for value, as it was the reason that half of the people surveyed answered, while the other half said they’d rather hold on to their cryptos as they expected them to grow in the near future.
The growth of the asset is also one of the main reasons why companies refuse to accept cryptos.
Potential for future fluctuations
Although I mentioned that the reason was the growth of the digital asset, it’s the potential for losses that usually bothers the companies, while the consumers are the other way around.
Let’s imagine a scenario of a company that was accepting Bitcoin payments in 2017 when BTC was about to hit its peak. Whatever they sold for BTC, they pretty much lost 80% on that item rather than make a profit.
This would be more than enough to scare most companies out of offering crypto payments. In fact, we don’t even need to imagine a company, there was actually a case with Steam, one of the largest video game libraries in the world. The company was accepting Bitcoin for years before it had to cut it short because of market volatility.
When it comes to accepting crypto payments, smaller companies have much less to lose as there is no real outside damage. For a large company which is listed on an exchange, it could be disastrous. In one quarter they may report $5 million revenue in cryptos, when in the second quarter that would equal $1 million. It’s just too risky for the investors themselves, who are usually the largest deterrents.
The other major deterrent for these companies is how dangerous it is to have large volumes of cryptocurrencies concentrated on one single address. If that address were to take a hit from a hacker, so much capital would be in jeopardy.
But diversifying them across multiple channels would be too much hassle for it to be worth it. Furthermore, there would be no business benefits from the banks which are usually the repositories of the companies’ profits.
Overall, it’s safe to say that traditional companies don’t like being paid in cryptos because of how small the global crypto adoption is in modern times.